The Ministry of New and Renewable Energy (MNRE) is working on a set of guidelines to provide compensation to solar power generators in case they are asked to back-down capacity by distribution companies.

Talking on the sidelines of an industry event, MNRE secretary Rajeev Kapoor said the government is in the process of finalising guidelines on the solar power manufacturing and bidding and it includes a clause to compensate solar power companies. While he did not give details or the quantum of the compensation, he said the document should be finalised in a week’s time.

Power distribution companies have often been blamed for arbitrarily cutting off solar and wind power or asking the power generators to back-down capacities which not only hurt the project developers but also investors.

Backing-down usually happens when the power distribution companies have an option of buying cheaper power from some other sources. It can also happen if there is no proper evacuation or transmission infrastructure or if the grid does not have the power to buy more power.

Also, poor financial health of power distribution companies leads to such situations.

He added that while there is no provision of compensating wind power generation companies but the government is mulling a clause to compensate such companies as well. Read More…